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Sharing industry insights
Kraft Foods executives discuss new and expanding grocery industry initiatives designed to grow a grocer's business while deepening the manufacturer's commitment to sustainability, energy cost reductions, distribution imperatives, new product development, the price-value equation, and retail partnerships.
Kraft Foods' Denny Belcastro, vice president of customer development and industry affairs, and Diane Harper, vice president of shopper insights discuss the changing retail landscape.
How would you characterize the current state of the food industry?
KRAFT: In general, the industry continues to be very segmented and very diverse. Whether you're on the manufacturer side or the retailer side, there is a constant push to make sure that you understand the Consumer and are meeting the current needs in the marketplace while keeping an eye on future trends.
We're going to continue to see consolidation among manufacturers, retailers and trade associations and partnerships such as Mars/Wrigley and InBev/Anheuser-Busch where synergy and leverage in category leadership becomes mission critical.
On the retail side, we expect retailers to continue to develop formats that fit what the consumer is looking for today. The economy, energy sources and sustainability are driving forces that will clearly impact our industry.
The price-value relationship to the consumer also will impact the development of retail formats as well as packaging and product development. Instead of paying more for the same size package, consumers may decide to trade down to a smaller package to stay with their favorite brand. We may also start to see a move towards an increase in the bonus or bundle packs offerings to create value.
How is Kraft meeting the needs of today's marketplace?
KRAFT: At Kraft, we're fortunate because we have such a diverse portfolio of products. We also have a highly adaptive supply chain, and this is a key area in which we will continue to work closely with our retail partners to uncover potential new ways to working together to meet their specific needs.
The goal is to have the quickest and most efficient supply chain so that we have good product representation on the shelves to meet consumer demand and preferences. Both manufacturers and retailers will continue to strive to minimize the amount of inventory in the pipeline while still meeting the needs of shoppers.
What has Kraft learned about today's consumer and how are those insights being translated into new products?
KRAFT: Kraft has terrific brand names that have been around for a long time. We continually look to transform these products to the needs of today's consumer. We have identified four shopper platforms that are driving shoppers: convenience, quick meals, premium/indulgent products, and health and wellness.
From shoppers we hear: 'save me time, save me money and save me, but don't forget to indulge me.' These four shopper insight platforms have become the building blocks for some of our new products and twists on old favorites.
We're seeing strong growth in foods that are better for you, fresher and less processed. But when people want to indulge, they want it to be a real treat. Our Oreo Cakesters, an indulgent product, are performing extremely well.
What are some of the most important issues facing the food industry in the years ahead?
KRAFT: Supply chain has to be on the list as costs of energy and transportation are big cost drivers for all partners. Food safety also is a top priority. We need to keep the food supply as safe as possible. Product-of-origin will continue to be important, as consumers want to have a better understanding of where their food is coming from especially outside of the U.S.
What are some of the Sustainability initiatives being employed at Kraft?
KRAFT: At Kraft, we are approaching sustainability as a business strategy. Our focus will continue to be on energy, packaging, waste, and sourcing.
We are advancing programs that look "end to end," incorporating elements of sustainability throughout our supply chain, especially agricultural commodities. For example, Kraft is the largest buyer of Rain Forest Alliance coffee beans worldwide where certification leads to better farming methods, less environmental impact, higher yields, and fair wages among workers. In addition, we are focused on developing right sized packaging, better use of water resources at our plants, and more energy efficient distribution centers.
Please detail Kraft's Shopper Insights approach to retail collaboration.
KRAFT: Shopper Insights is a different approach of going to market. Retailers are becoming more and more sophisticated in their ability to leverage information and they have a better understanding of the shopper than ever before. In the view of the retailer, meeting shoppers' needs is vital for businesses to be healthy and grow.
Likewise, we view the store environment as an important vehicle for getting our message out to the consumer. We look to partner and build collaborative relationships with retailers using information we have both gathered. We are looking for ways to grow together and figure out how our brands can meet both the needs of the retailer and the shopper.
How is Kraft helping retailers understand consumer behavior?
KRAFT: We can bring a view of the external environment. Retailers don't necessarily know how shoppers are behaving outside of their store. We're bringing that to the table so that they can be smarter marketers.
The breadth of the Kraft portfolio provides us with the ability to offer solutions across a number of categories. We're the biggest food vendor to any retailer. If we're smart about what we bring to shoppers, we're going to win together.
What does a retailer have to do to participate in the Shopper Insights program?
KRAFT: We really don't need anything specific from the retailer. They just have to be willing to have a conversation and the will to collaborate. It's up to us to actively develop and mine insights specific to our retailer partners and to identify opportunities for growth.
Can you identify some Shopper Insights success stories?
KRAFT: One example is in the meal solutions area. We've developed in-store meal solution centers that help shoppers with the age old question of, "what's for dinner?" The centers bring together a number of different products from around the store along with easy-to-prepare recipes. It is not just a matter of putting all of our products together in a display. It is working to figure out what will attract the shopper and what will meet the shoppers' needs.